The recent decision by the Federal Capital Development Authority (FCDA) to increase land rents and rates will translate into higher cost of living for residents, estate managers and developers have said.

The developers have also warned that the FCDA’s action will trigger a cycle of skyrocketing rents in the city and environs, as the new rates will lead to higher charges for acquiring and developing residential and commercial houses in Abuja.

The Ministry of the Federal Capital Territory (FCT) recently announced an increment, by over 80 per cent, of all rates charged by it for processing, documentation, acquisition and development of land in the area.

The Minister, Adamu Aliero said he endorsed the move in order to boost the internally generated revenue (IGR) of the FCDA, coupled with the need to review land charges, which have remained unchanged for more than five years.

Although, the Land Use Act of 1978 empowers the minister to revise rentals at intervals, some residents of the city have expressed worry that increment at this time will retard housing development in Abuja.

The increment affects annual ground rent - a charge paid to the FCT authorities for the use of land - processing fees for land application; cost of obtaining a certificate of occupancy (C of O) and premium charges for properties in prime locations. A new property tax has also been introduced for already finished buildings.

City of unequals

The authorities have categorised the city into A-D, depending on the facilities provided in each area. With the new rates, residents who have plots of land in Asokoro, Maitama and Wuse11 - all in Category A and fully serviced by the authorities - will have to pay N40,000 per square metre for ground rent, 60 per cent more on the N25,000 they used to pay.

People who own plots in category A will pay N18, 000, as against N2,000 per square metre before now, as premium charges.

The new rates payable by districts in category B equal those for category A. Category B districts include Garki, Wuse I, Guzape and Utako districts.

Category A and B districts have their entire basic infrastructure provided by the authorities, including water, sewage, and electricity.

“They are fully serviced areas,” Muhammad Gombe, head, corporate affairs and customer service for the Abuja Geographic Information Systems (AGIS), said.

Processing fee for land application for residential use was increased to N100,000 from N51,000. The fee for commercial land, which used to be N20,000 is now N100, 000.

How will it affect us?

Land is the first item an investor or a real estate developer acquires to build either a commercial or residential building. So, increasing rates on its acquisition will cause price increments that will spiral down and around, according a real estate expert.

“In the end, everybody will be affected by the cascade of price increases that will follow,” Lawrence Ogunade, a real estate agent said.

Mr. Ogunade’s view is shared by other real estate developers NEXT spoke with.

They said the increase will affect the cost of doing business for investors and developers who will, in turn, shift the burden to tenants. Those who use the properties, for business will in turn transfer the burden to the cost of their services and goods. This means there will be a rise in the already outrageous cost of living in the city.

Kingsley Idike of Lumen Real, said his firm will simply pass the additional cost to his customers because “I am in business to make profits.”

Some residents also described the increase as unnecessary and a further attempt to deny some residents of the right to own property.

“This is unfortunate, as only a few people can afford the charges; there are many Nigerians who want to own land and may not be able to cope with the cost,’’ a resident said.

Mr Gombe, however, stated that proceeds from the current policy will be used to develop basic infrastructure in areas where they are collected.

“Government is trying to partner with the people to provide a certain percentage of the cost of developing a plot,” he said. “From the estimation, it will cost about N37,000 to provide infrastructure on one square metre. So, government cut this N37,000 down to the new rates being charged on premium.

It is more like government is subsidising it,” he said.